4 Potential IPOs to Watch

Dropbox and Twitter headline the next possible IPO stars

Initial public offerings — IPOs for short — are one of those investment opportunities that get people talking. After all, the idea of getting in on the ground floor of a hot new company as it becomes publicly traded is pretty exciting!

As I recently discussed with such a strong IPO market, I’m not just watching the companies that have recently gone public, I’ve also got my eye on companies that I think are not only on their way to an IPO, but also have the potential to be solid investments. Here are four game changing companies that I am watching right now that could well go public and present some interesting opportunities.

Square is a payments processor company that was co-founded by Jack Dorsey, the creator of the popular social networking site Twitter. Square passed the $6 billion annual transactions run-rate during the middle part of 2012, and has showed no signs of slowing. So far, Square has raised $341 million, with investors including Esther Dyson, Marissa Mayer, Richard Branson and MC Hammer.

Dropbox currently provides 200 million account holders with secure and user-friendly access to cloud storage, in the form of free and paid accounts. Dropbox has generated a lot of buzz by catering to the average person who needs to share and store things beyond the capacity of their physical storage. Management has decided to put more attention toward businesses, which they believe could additional growth.

Twitter is expected to bring in $950 million in ad revenue in 2014, according to eMarketer, as the company gains traction in mobile advertising. That’s up from the firm’s September forecast of $808 million in the period. The researcher predicts ad revenue of $1.3 billion by 2015. Twitter’s mobile ad revenue has proven to be a strong catalyst for the company as well. For the current year, Twitter is expected to scoop up total ad revenue of $583 million, compared with a previous estimate of $545 million. And for mobile ad revenue, forecasts call for Twitter to earn $309 million, more than double $138 million in 2012.

Eventbrite is an event planning and ticketing platform. The company crossed $1.5 billion in gross sales and 100 million tickets sold. And the growth seems to be accelerating with $600 million of those sales and 36 million of those tickets completed in 2012 alone.

Each of these companies have strong growth catalysts and, if they do indeed go public, would generate a lot of interest on Wall Street. Whether that interest is ultimately positive or negative would depend on the pricing of the actual IPO.

If a company is not realistic and overreaches on valuation, investors can expect a disappointing return. On the other hand, a realistic or undervalued IPO price could mean significant upside potential. There’s a lot that needs to happen before we can make that determination, but it’s still fun to keep an eye on potential IPO blockbusters like these.

Based in Silicon Valley, Tom Taulli is in the heart of IPO land. On a regular basis, he talks with many of the top tech CEOs and founders trying to find the next hot deals and finding out which start-ups are stinkers.

A long-time follower of the IPO scene, back in 1999 Tom started one of the first sites in the space called WebIPO. It was a place where investors got research as well as access to deals for the dot-com boom. Tom also wrote the top-selling book, Investing in IPOs. In it, he covers all the aspects of analyzing an IPO, such as reading the prospectus, detecting the risk factors and understanding some of the arcane regulations. But don’t worry — if that process is too intimidating for you, thankfully Tom will do the legwork for you right here in the IPO Playbook blog.

Tom is routinely quoted in the media about upcoming deals with his interviews on CNBC and Bloomberg TV, but he is eager to take your questions too. You can message him on Twitter at @ttaulli. And feel free to weigh in via the comments section on any of his IPO Playbook posts.